ChinaScope Daily Dim Sum

Thursday, May 10, 2012

55 Million New Credit Cards Issued in 2011

Source: China Business News, ChinaScope Financial (Data)

+ According a recent report released by the China Banking Association, there were 55 million new credit cards issued in China in 2011. In the same year, a total of 285 million credit cards were issued, up 24.3% year-on-year. Transaction volume amounted to CNY 7.56 trillion, up 47.95% year-on-year.

+ Unpaid debt by credit card owners was CNY 812.96 billion in 2011, up 81% year-on-year. Of this number, debt exceeding six months was CNY 11.03 billion, a year-on-year increase of 43.5%.

Credit cards and line of credit have grown steadily in recent years, supported by increasing in banks’ credit commitments. Meanwhile the percentage of overdue credits is declining.

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Wednesday, May 9, 2012

ZHOU Hongyi: Qihoo 360 to Launch Own-brand Cell Phone

Source: Sina, ChinaScope Financial (Data)

+ ZHOU Hongyi, chairman of Qihoo 360 Technology Co. Ltd. disclosed on May 4 that his company will cooperate with mobile phone producers to develop an OEM phone under the 360 brand, targeting low-end market users.

+ Qihoo 360 hopes its partner will provide users with high-level configuration smart phones at zero profit.

+ Qihoo 360 is producing a very popular anti-virus software, which the company hopes to publicize further with the phone launch.

About 70% of Chinese internet users enjoy mobile access.

360 Phone is planning on entering the 1000-1500 segment, which has been growing in the last part of 2011.

The high overall installation rate compared with the low pre-installation rate, shows the popularity of the 360 antivirus software. The 360 phone launch is expected to further increase the overall installation rate.

Currently Qihoo does not generate much revenue from mobile security products. The revenue composition of Net Qin, however, indicates that the mobile antivirus software market has great revenue generation potential.

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3G Users to Exceed CNY 450 Million in 2015

Source: Ministry of Industry and Information Technology, ChinaScope Financial (Data)

+ According to the Ministry of Industry and Information Technology’s (MIIT) development goal in the recently released 12th Five-Year Plan (12th 5YP) on the Telecommunications Industry, China’s 3G users will exceed 450 million by 2015, accounting for more than 36% of the total mobile phone subscribers.

+ The plan also outlines a revenue goal for the telecommunication industry of CNY 1.5 trillion. Of this amount, operating income of telecom companies engaged in infrastructure construction is expected to be more than CNY 1.1 trillion. Fixed Asset Investment goal is CNY 2 trillion.

Despite rapid growth in recent years, 3G subscribers still account for only about 15% of total mobile phone subscribers.

In the 12^th 5 year plan, both telecommunication revenue and FAI are expected to grow significantly.

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Evergrande Real Estate: Sales Revenue CNY 8.19 Billion in April, Up 33.1% YoY

Source: Company Disclosure, ChinaScope Financial (Data)

+ Evergrande Real Estate Group Ltd. announced on May 7 that the company made CNY 8.19 billion in contracted sales revenue this April, up 33.1% year-on-year and 103.5% month-on-month. Meanwhile, contracted sales area reached 1.38 million square meters, up 57.8% year-on-year and 126.4% month-on-month.

+ According to Evergrande, stronger sales campaign efforts have led to the performance improvement. In April, the company launched seven new projects, raising the number of sale projects to 143.

Evergrande (3333.HK) realized significant month-on-month sales value growth in April 2012. In year-on-year terms Jan-April cumulative sales value decreased for Evergrande and increased for other developers. All companies have seen declining average sales prices.

Wednesday, May 2, 2012

Air China’s Net Profit CNY 239 Million in Q1, Down 85% YoY

Source: Air China Ltd., ChinaScope Financial (Data)

+ Air China Ltd. released its first-quarter financial report on April 26, showing that net profit attributable to shareholders of the listed company was CNY 239 million, down 85.70% year-on-year in Q1.

+ Due to higher jet fuel prices, Air China’s net profit attributable to shareholders of the parent company went down by CNY 1.43 billion year-on-year. In addition, foreign exchange gains and investment returns also decreased year-on-year.

+ The company also announced a private placement plan, which aims to raise CNY 1.05 billion via shares selling to the controlling shareholder China National Aviation Holding Company (CNAH). CNY 1 billion of the raised amount will be used for two energy-saving projects and for repaying bank loans used when the company increased its holdings in Cathay Pacific Airways.

Both revenue growth and margins are dismal.

Key operation data indicated a weak trend of Air China’s revenue in 2012.

BOC’s Net Profit CNY 36.76 Billion in Q1, Up 9.94% YoY

Source: Bank of China, ChinaScope Financial (Data)

+ According to the first-quarter financial report released by Bank of China (BOC) on April 26 the bank’s net profit was CNY 36.76 billion, up 9.94% YoY in Q1. The numbers are based on the International Financial Reporting Standards.

+ The bank’s return on equity (ROE) was 19.81% in the first quarter, down 0.42% YoY and average return on assets (ROA) was 1.24%.

+ By the end of March 2012, the BOC’s non-performance loan (NPL) ratio was 0.97%, down 0.03 percentage point YoY, amounting to NPLS of CNY 63.94 billion, up CNY 665 million. Capital adequacy ratio and core capital ratio were 12.80% and 9.97%, down by 0.17 and 0.1 percentage points YoY.

The increase in the growth rate of interbank lending and deposit might be caused by tighter credit loans regulation.

Growth in customer deposits led to higher growth in interest expenses in 2012Q1.

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PetroChina’s Net Profit Up 5.8%, Sinopec’s Down 35.04% in Q1

Source: Petrochina, Sinopec, Sinopec, ChinaScope Financial (Data)

+ According to PetroChina, its operating revenue was CNY 525.65 billion, up 17.86% YoY and net profit was CNY 39.15 billion, up 5.8% YoY in Q1. The growth is mainly due to exploration and production, which generated operating profits of CNY 60.38 billion, up 31.6% YoY.

+ Meanwhile, Sinopec’s first-quarter operating revenue was CNY 398.31 billion, up 11.35% YoY, while net profit was only CNY 13.41 billion, down 35.04% YoY. Exploration and mining generated operating income of CNY 19.55 billion, up 48.75% YoY, while refining losses amounted to CNY 9.17 billion.

+ The difference in the two companies Q1 performance is mainly due to their different reliance on crude oil imports. Sinopec imports 80% of its crude oil, compared to 30% for PetroChina, the former being more vulnerable to international oil price fluctuations.

Revenue growth of both companies decreased in 2012Q1, resulting in a net profit attributed to share holders growth of 5.81% for PetroChina and a negative 37.42% for CPCC.

Margin ratios for PetroChina have rebounded, while those of CPCC remain weak.